4 Stats Every Recruiter Should Know About HR Analytics

Mike Roberts April 6, 2015

“Data” and “Intelligence.” Although professionals often use the terms synonymously, there are big differences between them. Data alone is simply a collection of information that has little utility without a methodology and set of tools for understanding what it means. But this is where solutions like data analytics come into play—they facilitate the transformation of data into intelligence.

For the past few years, the talent acquisition function seemed to have been lagging behind in the adoption of data analytics solutions. For instance, when compared to other functions—like marketing—where some professionals have been using tools like Google Analytics for almost a decade, many recruiting organizations are just now starting to adopt technology for visualizing and analyzing data.

This was the topic of a recent research study by Software Advice. Their research team interviewed industry experts and also surveyed HR analytics users to find out how technology is helping companies refine and optimize the hiring process. Below, we’ll highlight some key findings.

1. Only 13% of Companies Using HR Analytics Software Have More than 2,500 Employees

Despite the significantly larger resource pool enterprise companies have at their disposal, it was small-to-medium sized businesses that led the charge on analytics adoption. According to Software Advice, of the companies that indicated they were using analytics, 87% had less than 2,500 employees. More than a quarter of the analytics users in the survey were from companies with 100 employees or less.

The results from this question come with little surprise. As mentioned above, the talent acquisition function in general is lagging behind in analytics adoption. And coupled with the fact that large enterprises tend to make decisions with significantly less agility than SMBs, we can only expect smaller organizations to adopt next-generation solutions at a faster rate.

2. Companies Using HR Analytics Outperform Others Across the Board in KPIs

Software Advice asked participants which recruiting and hiring key performance indicators they were using, as well as their performance in those metrics. From there, they were able to measure the performance of analytics user versus non-users in various areas.

Clearly, companies using analytics solutions outperformed those without the capability in all metrics categories. Looking at metrics like time to hire, we see significant differences in performance of users versus non-users.

When we take a step back and consider what exactly analytics solutions do, these results make sense. Companies with data analysis tools are able to drill-down into the variables that make up a metric like time to hire, identify weaknesses in performance, and then work to optimize it. The same can be said for KPIs like productivity per recruiter or cost to hire.

As is the case with most software investments, more than half of recruiters surveyed blamed “perceived cost” (or budget) for not yet adopting HR analytics software. At 21%, a distant second-most chosen response was “current method is effective.”

What’s interesting is the wording that Software Advice used in this survey question: “perceived cost.” Many companies are quick to look only at the up-front cost of adopting new technology, rather than taking a holistic, long-term view of how the technology will impact performance down the road and the associated ROI. The idea that a solution will “pay for itself” over time is difficult to pitch to a decision-maker without some hard figures.

4. 55% of Recruiters Agree on a Common Definition for HR Analytics

The definition of what exactly “HR Analytics” means is of course subjective. Software Advice highlighted this by asking survey takers to choose which definition they felt was correct among a long list. According to the research company, “Statistically Modeling Employee Data” is technically the correct definition. As shown below, 55% of recruiters chose this.

The differences in how recruiters define analytics is indicative of the lack of adoption. This survey shows that there is still the need for education on this topic before more widespread adoption takes place. We can expect less ambiguity and better alignment of what recruiting and HR analytics are as more companies invest in the capabilities over time.

Making Your Data Work For You

With today’s heated talent war well underway, the costs of not optimizing the hiring funnel or working to lower time to hire are only rising. Doing so effectively requires the use of next-generation analytics and data visualization tools. However, it seems most large organizations that would benefit immensely from this technology are the ones with the most hesitation. If you’re interested in learning more, read Software Advice’s full write-up on this study here.